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Management of operational
and financial risks
The PSA Peugeot Citroën Group is exposed
to various risks in the normal course of
business. These risks are managed and
hedged by applying procedures that are
defined and monitored at Group level.
They include both operational and
financial risks. In addition, the Group is
exposed to specific risks on the activities
of the finance companies.
1. OPERATIONAL RISKS
The Group has created a risk prevention
and management organization charged
with implementing appropriate measures
to limit the consequences of events
affecting Group operations and prevent,
to the extent possible, the risk of project
management failures or organizational
dysfunctions.
The corporate Risk Prevention and
Management Department guarantees the
consistency of operational risk management
initiatives and their cross-functional
implementation. It defines risk identification
and assessment methods, and helps to
define and control risk management
plans. It is supported by a network of
correspondents or experts working in the
Group’s various departments and facilities,
who are responsible for deploying Group
risk prevention policies in their units and
monitoring the status of preventive and
corrective action plans. Risks are assessed
in detail using a Group-wide method and
annual programs are implemented to
manage them. This means that potential
vulnerabilities are identified early and that
protective or preventive measures are
commensurate with the risks involved.
The main operational risks are risks likely
to disrupt or halt the Group’s design,
production or distribution activities, or to
pose a threat to the Group’s employees
or its tangible or intangible assets. They
include the risk of damage to research
facilities, data processing centers, production
or distribution units, as well as incidents
affecting the integrity, confidentiality and
use of Group information systems and
computerized data, and damage to the
Group’s reputation.
Systematic prevention programs deal, in
particular, with fire risks, risks concerning
the supply of components and the
protection of vehicle inventories. The
Group invests in data protection and
back-up programs, data processing center
security programs and training in data
control techniques for employees. Special
attention is paid to the environmental
impact of manufacturing facilities. The
design specifications of plant and
equipment include processes and devices
to control pollution and environmental
risks. The corporate Risk Management and
Prevention Department centrally manages
environmental risks related to manufacturing
operations and regularly publishes Grouplevel
environmental reports.
The structures dedicated to managing
environmental risks, at the Automobile
Division’s production plants and elsewhere
in the organization, comply with ISO 14001
environmental management standards.
Worldwide, the Group’s 20 main production
plants all earned ISO 14001 certification
between 1999 and 2002 and a further
four sites will be certified in 2003. The ISO
certification program is supported by
annual capital expenditure budgets for
environmental projects. All industrial projects
are reviewed by the design department, the
plant concerned, technical department
experts and Group environmental specialists
in order to identify the potential risks and
devise appropriate responses.
Group policy in the area of insurance
focuses on risk prevention. All major risks
are insured and deductibles are set at
appropriate levels. All insurance cover is
taken out with leading insurers and
reinsurers based on the recommendations
of top ranking insurance advisors specialized
in major risks. The Group’s global insurance
programs cover the following main risks:
• Damage to property and resulting
operating losses, up to a maximum of
€1,500 million, excluding the Automotive
Equipment business, and €228 million
for the Automotive Equipment business.
• Liability claims resulting from personal
injury or tangible or intangible losses
arising from the use of the Group’s
products or otherwise, up to amaximum
of €150 million excluding the Automotive
Equipment business, which has taken
out specific cover for these risks.
• Theft or damage to new vehicles held
on storage lots, up to a maximum of
€46 million.
• Theft or damage to vehicles and
components during transport, up to a
maximum of €45 million.
Thanks to its good insurance record, the
Group has been able to renew the cover
provided by its insurance programs for
2003 without having to pay significantly
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